Asia Pacific
During the first half of 2008, Asia Pacific jackup rig utilization remained high and day rates stabilized as strong rig demand was offset by new rig deliveries. During the latter half of 2008, jackup rig demand was significantly impacted by the decline in oil and natural gas prices and the global economic crisis, resulting in a significant reduction in utilization and day rates through the first six months of 2009. With limited contract opportunities currently available and an expected increase in the supply of available jackup rigs from newbuild deliveries, cancelled tenders and unexercised contract extension options, we anticipate that utilization and day rates will remain under pressure for the remainder of 2009.
Europe/Africa
Our Europe/Africa offshore drilling operations are mainly conducted in northern Europe. During 2008, shortfalls in rig availability in this region led to sustained high utilization levels and a slight increase in day rates. Although utilization and day rates remained high during the first quarter of 2009, the decline in oil and natural gas prices during the latter half of 2008 resulted in several cancelled tenders and unexercised contract extension options. Tender activity in the region during the second quarter was minimal, and we expect this trend to continue for the remainder of the year. We anticipate that this market will experience excess rig availability in the near-term, which will result in a decline in utilization and day rates during the remainder of 2009.
North and South America
Demand for jackup rigs in the Gulf of Mexico stabilized during 2008, and jackup rig supply continued to decline as rigs were relocated to more economically attractive regions. As a result, utilization levels and day rates began to improve during the first half of 2008. In September 2008, damage caused by Hurricanes Gustav and Ike reduced the supply of available jackup rigs, however, the reduction was more than offset by a decrease in demand resulting from the global economic crisis and decline in oil and natural gas prices. As a result, utilization and day rates declined significantly during the first six months of 2009. With depressed oil and natural gas prices, a weakened global economy and the threat of severe weather during hurricane season, we expect continued declines in jackup rig demand resulting in low utilization and day rates for the remainder of the year.

A growing portion of our North and South America offshore drilling operations are conducted in Mexico, where demand for rigs increased during 2008 as Petróleos Mexicanos, the national oil company of Mexico ("PEMEX"), accelerated drilling activities in an attempt to offset continued depletion of its major oil and natural gas fields. During the first six months of 2009, demand for jackup rigs in Mexico remained high and day rates remained comparable with international rates despite the global economic crisis and depressed oil and natural gas prices. PEMEX is expected to issue additional tenders during the next several quarters, however, it is unclear whether these requirements relate to renewals of incumbent rigs. We expect future day rates to face pressure as drilling contractors with idle rigs in other geographic regions pursue contract opportunities in Mexico.

RESULTS OF OPERATIONS
    The following table highlights our condensed consolidated results of
operations for the three-month and six-month periods ended June 30, 2009 and
2008 (in millions):



                                           Three Months Ended           Six Months Ended
                                                 June 30,                    June 30,
                                             2009          2008          2009        2008

Revenues                                     $511.6       $609.4      $1,020.9    $1,169.3
Operating expenses
  Contract drilling (exclusive of
depreciation)                                 177.8        203.0         341.5       381.6
  Depreciation                                 49.3         46.7          96.5        92.4
  General and administrative                   16.0         13.8          28.0        26.5
--------------------------------------------------------------------------------------------
Operating income                              268.5        345.9         554.9       668.8
Other income, net                               6.9          6.8           2.6        11.3
Provision for income taxes                     49.1         64.6         105.4       123.2
--------------------------------------------------------------------------------------------
Income from continuing operations             226.3        288.1         452.1       556.9
(Loss) income from discontinued
operations, net                               (24.9 )        9.8         (28.6 )      14.7
--------------------------------------------------------------------------------------------
Net income                                    201.4        297.9         423.5       571.6
Less: Net income attributable to
noncontrolling interests                       (1.1 )       (1.2 )        (2.5 )      (2.9 )
--------------------------------------------------------------------------------------------
Net income attributable to Ensco             $200.3       $296.7      $  421.0    $  568.7
--------------------------------------------------------------------------------------------


         27
---------------------

For the quarter ended June 30, 2009, revenues declined by $97.8 million, or 16%, and operating income declined by $77.4 million, or 22%, as compared to the prior year quarter. The declines were primarily due to decreased utilization of jackup rigs across our worldwide fleet, partially offset by an increase in average day rates earned by our contracted jackup rigs in North and South America and ENSCO 7500. For the six-month period ended June 30, 2009, revenues declined by $148.4 million, or 13%, and operating income declined by $113.9 million, or 17%, as compared to the prior year period. The declines were primarily due to decreased utilization of our Asia Pacific and North and South America jackup fleets, partially offset by an increse in average day rates earned by our contracted jackup rigs in North and South America.
Oil and natural gas prices have declined substantially from their 2008 levels. As a result, operators continue to defer and/or curtail drilling programs, which will likely result in a reduction in demand for drilling rigs and a decline in utilization and day rates. If current economic conditions persist, we believe it is unlikely the operating results achieved during 2008 and the six-month period ended June 30, 2009 will be sustained during the remainder of the year.
Rig Locations, Utilization and Average Day Rates We manage our business through four operating segments. Our jackup rigs are mobile and occasionally move between operating segments in response to market conditions and contract opportunities. The following table summarizes our offshore drilling rigs by segment and rigs under construction as of June 30, 2009 and 2008:

                              June 30,        June 30,
                                2009             2008

Deepwater(1)(2)                    3              1
Asia Pacific                      20             20
Europe/Africa                     10             10
North and South America           13             13
Under construction(1)(2)(3)        5              6
-------------------------------------------------------
    Total(4)                      51             50
-------------------------------------------------------

(1) During the third quarter of 2008, we accepted delivery of ENSCO 8500 and mobilized the rig to the Gulf of Mexico. The rig commenced operations in the Gulf of Mexico under a four-year contract in June 2009.

(2) During the second quarter of 2009, we accepted delivery of ENSCO 8501 which is currently mobilizing to the Gulf of Mexico from Singapore. ENSCO 8501 is expected to commence drilling operations in the Gulf of Mexico under a three-and-a-half-year contract in October 2009.

(3) During the third quarter of 2008, we entered into an agreement to construct ENSCO 8506 with delivery expected during the second half of 2012.

(4) The total number of rigs for each period excludes rigs reclassified as discontinued operations.

The following table summarizes our rig utilization and average day rates from continuing operations by operating segment for the three-month and six-month periods ended June 30, 2009 and 2008:

                               Three Months Ended        Six Months Ended
                                    June 30,                 June 30,
                                 2009       2008         2009         2008
Rig Utilization(1)
   Deepwater                        96%        98%          98%         97%
   Asia Pacific(3)                  63%        91%          70%         94%
   Europe/Africa                    87%        97%          93%         98%
   North and South America          72%       100%          70%         95%
-----------------------------------------------------------------------------
     Total                          72%        95%          76%         95%
-----------------------------------------------------------------------------

Average Day Rates(2)
   Deepwater                   $490,865   $365,496     $490,865    $323,215
   Asia Pacific(3)              144,517    152,906      154,093     148,023
   Europe/Africa                219,715    217,710      219,309     215,435
   North and South America      119,190     93,333      119,127      89,605
-----------------------------------------------------------------------------
     Total                     $171,439   $154,454     $169,656    $150,958
-----------------------------------------------------------------------------

(1) Rig utilization is derived by dividing the number of days under contract, including days associated with compensated mobilizations, by the number of days in the period.
(2) Average day rates are derived by dividing contract drilling revenues, adjusted to exclude certain types of non-recurring reimbursable revenues and lump sum revenues, by the aggregate number of contract days, adjusted to exclude contract days associated with certain mobilizations, demobilizations, shipyard contracts and standby contracts.
(3) Rig utilization and average day rates for the Asia Pacific operating segment include our jackup rigs only. The ENSCO I barge rig has been excluded.

Detailed explanations of our operating results, including discussions of revenues, contract drilling expense and depreciation expense by operating segment, are provided below.

Operating Income
Our business consists of four operating segments: (1) Deepwater, (2) Asia Pacific, (3) Europe/Africa and (4) North and South America. Each of our four operating segments provides one service, contract drilling. Segment information for the three-month and six-month periods ended June 30, 2009 and 2008 is presented below. General and administrative expense and depreciation expense incurred by our corporate office are not allocated to our operating segments for purposes of measuring segment operating income and were included in "Reconciling Items."

Three Months Ended June 30, 2009
(in millions)


                                                               North
                                                                and      Operating
                                       Asia       Europe/      South     Segments    Reconciling    Consolidated
                         Deepwater    Pacific     Africa      America      Total        Items          Total

Revenues                 $67.7      $161.5      $176.0      $106.4      $511.6       $   --           $511.6
Operating expenses
  Contract drilling
(exclusive
   of depreciation)       23.7        61.0        52.6        40.5       177.8           --            177.8
  Depreciation             3.7        22.2        11.0        12.1        49.0           .3             49.3
  General and
administrative              --          --          --          --          --         16.0             16.0
-----------------------------------------------------------------------------------------------------------------
Operating income
(loss)                   $40.3      $ 78.3      $112.4      $ 53.8      $284.8       $(16.3)          $268.5
-----------------------------------------------------------------------------------------------------------------

Three Months Ended June 30, 2008
(in millions)


                                                               North
                                                                and      Operating
                                       Asia       Europe/      South     Segments    Reconciling    Consolidated
                         Deepwater    Pacific     Africa      America      Total        Items          Total

Revenues                 $32.6      $263.5      $201.8       $111.5     $609.4       $   --           $609.4
Operating expenses
  Contract drilling
(exclusive
   of depreciation)        9.7        89.3        64.2        39.8       203.0           --            203.0
  Depreciation             2.3        21.2        10.8        11.9        46.2           .5             46.7
  General and
administrative              --          --          --          --          --         13.8             13.8
-----------------------------------------------------------------------------------------------------------------
Operating income
(loss)                   $20.6      $153.0      $126.8      $ 59.8      $360.2       $(14.3)          $345.9
-----------------------------------------------------------------------------------------------------------------


         30
---------------------

Six Months Ended June 30, 2009
(in millions)


                                                               North
                                                                and      Operating
                                       Asia       Europe/      South      Segments    Reconciling    Consolidated
                         Deepwater    Pacific     Africa      America      Total         Items          Total

Revenues                 $67.7      $382.4      $372.4      $198.4      $1,020.9      $   --         $1,020.9
Operating expenses
  Contract drilling
(exclusive
   of depreciation)       28.5       127.3       106.1        79.6         341.5          --            341.5
  Depreciation             6.0        43.9        21.9        24.1          95.9          .6             96.5
  General and
administrative              --          --          --          --            --        28.0             28.0
------------------------------------------------------------------------------------------------------------------
Operating income
(loss)                   $33.2      $211.2      $244.4       $ 94.7     $  583.5      $(28.6)        $  554.9
------------------------------------------------------------------------------------------------------------------

Six Months Ended June 30, 2008
(in millions)


                                                               North
                                                                and      Operating
                                       Asia       Europe/      South      Segments    Reconciling    Consolidated
                         Deepwater    Pacific     Africa      America      Total         Items          Total

Revenues                 $57.2      $518.7      $393.6       $199.8     $1,169.3      $   --         $1,169.3
Operating expenses
  Contract drilling
(exclusive
   of depreciation)       18.2       164.1       122.1        77.2         381.6          --            381.6
  Depreciation             4.5        42.3        21.3        23.4          91.5          .9             92.4
  General and
administrative              --          --          --          --            --        26.5             26.5
------------------------------------------------------------------------------------------------------------------
Operating income
(loss)                   $34.5      $312.3      $250.2      $ 99.2      $  696.2      $(27.4)        $  668.8
------------------------------------------------------------------------------------------------------------------


         31
---------------------

Deepwater
Deepwater revenues for the quarter ended June 30, 2009 increased by $35.1 million, or 108%, as compared to the prior year quarter. The increase in revenues was due to an increase in the day rate earned by ENSCO 7500, the recognition of ENSCO 7500 mobilization revenues and the commencement of ENSCO 8500 drilling operations in June 2009. In October 2008, we amended the ENSCO 7500 drilling contract and agreed to relocate the rig to Australia where we commenced drilling operations under a new contract in April 2009 at a day rate of approximately $550,000. Revenues earned during the mobilization period were deferred and are being recognized ratably over the firm commitment period of the contract (April 2009 through September 2010) at a rate of approximately $170,000 per day. Contract drilling expense increased by $14.0 million, or 144%, due to an increase in mobilization expense and personnel costs associated with ENSCO 7500 and, to a lesser extent, the commencement of ENSCO 8500 drilling operations. Depreciation expense increased by $1.4 million, or 61%, primarily due to ENSCO 8500, which was placed into service in June 2009.
Deepwater revenues for the six-month period ended June 30, 2009 increased by $10.5 million, or 18%, as compared to the prior year period. The increase in revenues was due to an increase in the day rate earned by ENSCO 7500, the recognition of ENSCO 7500 mobilization revenues and the commencement of ENSCO 8500 drilling operations in June 2009, partially offset by the deferral of ENSCO 7500 revenues during the rig's mobilization to Australia. Contract drilling expense increased by $10.3 million, or 57%, due to an increase in mobilization expense and personnel costs associated with ENSCO 7500 and, to a lesser extent, the commencement of ENSCO 8500 drilling operations. Depreciation expense increased by $1.5 million, or 33%, primarily due to ENSCO 8500 as noted above.
Asia Pacific
Asia Pacific revenues for the quarter ended June 30, 2009 declined by $102.0 million, or 39%, as compared to the prior year quarter. The decline in revenues was primarily due to a decline in utilization to 63% from 91% in the prior year quarter. The decline in utilization occurred due to lower levels of spending by oil and gas companies in response to the significant decline in oil and natural gas prices during the latter half of 2008 coupled with excess rig availability in the region. Contract drilling expense declined by $28.3 million, or 32%, as compared to the prior year quarter, primarily due to the impact of decreased utilization and a decline in repair and maintenance expense. Depreciation expense increased by 5% primarily due to the ENSCO 53 capital enhancement project completed during the second quarter of 2009 and depreciation on minor upgrades and improvements completed during 2008 and the first half of 2009.
Asia Pacific revenues for the six-month period ended June 30, 2009 declined by $136.3 million, or 26%, as compared to the prior year period. The decline in revenues was primarily due to a decline in utilization to 70% from 94% in the prior year period, partially offset by a 4% increase in average day rates. The decline in utilization occurred due to lower levels of spending by oil and gas companies as noted above, coupled with excess rig availability in the region. The increase in average day rates resulted from higher levels of spending by oil and gas companies during 2008 prior to the decline in oil and natural gas prices. Contract drilling expense declined by $36.8 million, or 22%, as compared to the prior year period, primarily due to the impact of decreased utilization and a decline in repair and maintenance expense. Depreciation expense increased by 4% primarily due to the ENSCO 53 capital enhancement project completed during the second quarter of 2009 and depreciation on minor upgrades and improvements completed during 2008 and the first half of 2009.

Europe/Africa
Europe/Africa revenues for the quarter ended June 30, 2009 declined by $25.8 million, or 13%, as compared to the prior year quarter. The decline was primarily due to a decline in utilization to 87% from 97% in the prior year quarter. The decline in utilization occurred due to lower levels of spending by oil and gas companies in response to the significant decline in oil and natural gas prices during the latter half of 2008. Contract drilling expense declined by $11.6 million, or 18%, as compared to the prior year quarter, primarily due to a decline in mobilization expense and the impact of decreased utilization. Depreciation expense increased by 2% due to depreciation on minor upgrades and improvements to our Europe/Africa fleet completed during 2008 and the first half of 2009.
Europe/Africa revenues for the six-month period ended June 30, 2009 declined by $21.2 million, or 5%, as compared to the prior year period. The decline was primarily due to a decline in utilization to 93% from 98% in the prior year period. The decline in utilization occurred due to lower levels of spending by oil and gas companies as noted above. Contract drilling expense declined by $16.0 million, or 13%, as compared to the prior year quarter, primarily due to a decline in mobilization expense and the impact of decreased utilization, partially offset by an increase in repair and maintenance expense. Depreciation expense increased by 3% due to depreciation on minor upgrades and improvements to our Europe/Africa fleet completed during 2008 and the first half of 2009.
North and South America
North and South America revenues for the quarter ended June 30, 2009 declined by $5.1 million, or 5%, as compared to the prior year quarter. The decline was primarily due to a decline in utilization to 72% from 100% in the prior year quarter, largely offset by a 28% increase in average day rates. The decline in utilization occurred due to lower levels of spending by oil and gas companies in response to the significant decline in oil and natural gas prices during the latter half of 2008. The increase in average day rates was largely due to the relocation of ENSCO 89, ENSCO 93 and ENSCO 98 to Mexico and ENSCO 68 to Venezuela during the second half of 2008 or first half of 2009, where day rates are generally higher than the Gulf of Mexico. Contract drilling expense increased by $700,000, or 2%, as compared to the prior year quarter. Incremental expenses associated with operating in Mexico and Venezuela were largely offset by the impact of decreased utilization in the Gulf of Mexico. Depreciation expense increased by 2% due to the ENSCO 89 and ENSCO 93 capital enhancement projects completed during the second quarter of 2009 and depreciation on minor upgrades and improvements to our North and South America fleet completed during 2008 and the first half of 2009.
North and South America revenues for the six-month period ended June 30, 2009 declined by $1.4 million as compared to the prior year period. The decline was primarily due to a decline in utilization to 70% from 95% in the prior year period, largely offset by a 33% increase in average day rates. The decline in utilization occurred due to lower levels of spending by oil and gas companies as noted above. The increase in average day rates was largely due to the relocation of ENSCO 89, ENSCO 93 and ENSCO 98 to Mexico and ENSCO 68 to Venezuela as noted above. Contract drilling expense increased by $2.4 million, or 3%, as compared . . .